April 2 (Bloomberg) -- Hong Kong developer stocks jumped
the most in more than two years on speculation the government
may ease curbs on home prices after the city’s leader said the
market is no longer overheated.

Chief Executive Leung Chun-ying said yesterday that the
government won’t extend a pilot program to reserve homes for
local residents, part of a package of measures aimed at cooling
prices in the world’s most-expensive housing market. Prices fell
4.1 percent in the past year, after more than doubling since
2009, as higher sales taxes and down-payment requirements were
imposed.

“Although we do not view the chief executive’s comment as
a signal of actual easing, we believe the market will take a
different view in light of the current cheap valuation of the
Hong Kong property stocks,” Barclays Plc analysts led by Paul
Louie said in a note today. “It is fair to say that the housing
market is no longer overheating.”

The value of homes sales in Hong Kong fell to HK$20.6
billion ($2.66 billion) in March from HK$27 billion a year
earlier, Hong Kong Land Registry said on its website today.

Housing Target

Leung in September 2012 announced a plan giving only
citizens the right to buy apartments at some sites built by
private developers to ensure local needs are met. China Overseas
Land & Investment Ltd. won tenders for two sites under the
policy in June last year.

Suspending the policy would ensure that the housing supply
target set by the government will be met, as adding the
condition into land sales would cut demand from developers, the
Barclays analysts said.

“When we launched this pilot scheme, we said we would only
use it in an overheated market,” Leung told reporters
yesterday. “If we need it in the future, we can launch it in a
short period of time.”

Sylvia Wong, a Hong Kong-based analyst at UOB Kay Hian
Ltd., said setting aside the plan won’t have any impact on the
market, though she expects the curbs to stay in place as they
were needed to keep the housing market in the current state.

“No one expects the curbing measures to get tougher,” she
said today by phone. “The question is when they will ease.”

Development Secretary Paul Chan told lawmakers today that
the policy hasn’t been shelved, but there isn’t an urgency to
promote it now, according to Radio Television Hong Kong.